Monthly rise in lending belies sharp annual fall

The trade body for lenders – the Council of Mortgage Lenders – estimates that mortgage lending reached £21.4 billion in March.

This is a significant 19% higher than February’s lending total of £17.9 billion, but it’s still 19% lower than the £26.3 billion lent in March last year.

But the headline figures don’t tell the whole story.

The sharp fall in year-on-year lending was expected, as March last year saw significant rises in activity as borrowers rushed to beat the second property Stamp Duty deadline that came into effect from the beginning of April. Many of these were buy-to-let landlords buying investment properties before it would cost them a lot more to do so.

Quarterly lending figures

Mortgage lending for the first quarter of 2017 was an estimated £59.1 billion, 4% down on the fourth quarter of last year and a 6% decrease on the £63.0 billion lent in the first quarter of 2016.

CML senior economist Mohammad Jamei said: “Mortgage lending appears to be in neutral gear. Our gross estimate for March is £21.4 billion and this is broadly in line with average monthly lending over the past year. Within this aggregate level, there has been a shift towards first-time buyer and remortgage customers, away from home movers and buy-to-let landlords.

“We expect this profile to continue over the short-term, as low mortgage rates encourage existing borrowers to remortgage and government schemes help first-time buyers. We do not expect any marked effect from the General Election.”

Henry Woodcock, principal mortgage consultant at IRESS, added: “Going into April, the outlook for gross lending doesn’t look rosy. In addition to the snap general election announcement, which may result in people delaying significant financial commitments in the short term, there are also a few other factors at play that might dampen mortgage activity. Although unemployment remains low at under 5%, inflation is starting to eat into wage growth and is above the government’s 2% inflation target.

“Consumers may decide to delay buying that new home or changing mortgages until the economic picture is clearer.”